Ontario serves up miner with Statement of Defence

The Ontario government is asking the courts to dismiss a lawsuit by Northern Superior Resources which accuses the province of failing in its duty to consult with a northwestern Ontario First Nation.

The Ontario government says it’s not
liable for any damages incurred by a Sudbury-based junior miner after
a dispute between the company and a First Nation forced it to abandon
exploration work in northwestern Ontario.

The province submitted its Statement of
Defence with the Ontario Superior Court of Justice on Jan. 21 in
response to a $110-million lawsuit filed against the Crown last
October by Northern Superior Resources (NSR).

The company accuses the government of
failing in its legal duty to consult with the Sachigo Lake First
Nation after a series of disagreements with the band caused the
company to suspend exploration on a promising gold property in late
2011.

In an 18-page document outlining its
position, the government said the company’s claims for compensation
are “exaggerated,

excessive, remote” and should be
dismissed. The government contends Northern Superior’s decision to
stop exploration was their decision and the Crown is not responsible
for any demands made on the company by Sachigo, or the company’s
decision to reject them.

In its statement, the government
claimed from 2006 to 2011, Northern Superior annually entered into a
series of benefit agreements with the band that routinely involved
remitting 25 per cent of its exploration budget to the community for
salaries, infrastructure, capacity building and donations.

This was done with the knowledge, but
without the assistance, of the Ministry of Northern Development and
Mines (MNDM).

The company and the band enjoyed a good
relationship until things deteriorated in 2011, the final straw being
Sachigo’s demand for a 24 per cent “administration fee” to be
derived from the company’s upcoming exploration budget.

The government contends any community
consultation carried out by Northern Superior was done without
ministry assistance and any agreements signed with the First Nation
were for the company’s own benefit.

The province said it was never asked by
the company to intervene and resolve any disputes. And the ministry
was only told of the backstory when Northern Superior sent them a
letter in September 2012. The government maintains it “made
reasonable and good faith efforts” to repair the relationship, even
asking the company to participate in meetings with Sachigo Lake,
which it refused.

The ministry claims it heard complaints
about the company’s “conduct” which included staking claims
without informing the band and beginning exploration outside of any
agreements with the community. Northern Superior was “invited” by
the government to “voluntarily” participate in a new “plans and
permits” process under the Mining Act which didn’t take effect
until April 2013. The company refused, the government said.

The new regulations require prospectors
and companies to submit exploration plans or apply for exploration
permits before starting early work. Part of the process requires
companies to consult with affected First Nation communities.

Northern Superior is also challenging
the government’s decision to impose an exclusion zone around its
claims. After the company stopped exploration, the province closed
off a 23,000-square-kilometre tract of Crown land from further
staking in January, 2012.

Northern Superior claims this would
hamper any future exploration efforts in following its gold
discovery.

The government responds it did so at
the request of the Kitchenuhmaykoosib Inninuwug First Nation, which
asked for an embargo on exploration on its traditional territory
until it could finish an assessment, estimated to take three to five
years.

The province said Northern Superior
held no right and no title to that tract of Crown land and “the
Crown owed no duty to NSR to consider its interests in advance of
withdrawing said lands from staking.”

In a Jan. 24 release, Northern Superior
Resources responded that Ontario did nothing to carry out its legal
duty to consult with the First Nation and that there was nothing in
the Mining Act in 2011 to ensure that consultation could be done
properly and any issues that arose could be resolved.

Northern Superior implied that a double
standard exists that companies that “peacefully retreat” from the
areas where they have been “evicted” by First Nations are “left
to their own devices,” while those that cause “civil disobedience
and escalate matters” are compensated by government.

The company said what was “novel”
in the province’s statement is that mining companies must “bear
all the costs” for the duty to consult.

“This is the first time NSR was ever
made aware of such a position in this case.”